Seattle and the NBA: Must We Always Play Nice?

The NBA’s Board of Governors has voted to deny the application of the Sacramento Kings to relocate to Seattle, and it appears a deal may have been finalized that will keep the team there.  Could Seattle have done anything about this?  Chris Hansen has stated that he intends to continue the pursuit of an NBA team for Seattle, but he has not indicated any plan to legally challenge the NBA as part of his fight.

We respect that.  But the NBA owners may be vulnerable here.  Writing for Slate, Matthew Yglesias pointed out that the Seattle ownership group was willing to build an arena, whereas the Sacramento group persuaded the City of Sacramento to build a new arena for the Kings.

“The Seattle bid, in other words, would have set a good precedent for the future of American public policy.  And the owners didn’t want that.  The owners want to be able to make this move over and over again.  “Give us a new publicly financed stadium or we’ll move to Seattle” is a threat that works as well in Portland or Milwaukee or Minneapolis or Salt Lake City or Memphis or New Orleans or Phoenix as it does in Sacramento.  And the major American sports leagues are organized as a cartel for a reason.  An individual owner just wants to sell to the highest bidder.  But the league approval process means the owners as a whole can think of the interests of the overall cartel, and those interests very much include a strong interest in maintaining the ability to get cities to pony up subsidies.”

Isn’t there some kind of antitrust problem with this?  Certainly there is precedent for a lawsuit: in the 1980s, Al Davis tried to move the then-Oakland Raiders to Los Angeles, resulting in antitrust litigation about the NFL’s rule requiring that the other teams approve the move of a team.  The Ninth Circuit rejected the argument that the NFL was a “single entity,” thereby holding antitrust law applicable, and upheld the jury’s verdict that the clause violated antitrust law.  And Davis then indeed moved the Raiders to Los Angeles.  The NBA should be concerned about a similar result here.

When the NBA’s Relocation Panel voted to block the Kings’ move to Seattle, the NBA was quick to post on its website the reminder that legal action against the league “is a near impossibility, given that the NBA requires prospective owners to sign agreements that prohibit them from taking legal action if their bids are denied.”  But this suggests the league knows that its legal position is vulnerable.  If a prospective owner actually had the nerve to sue, the clause might well be held unenforceable: it would seem that a prohibition against enforcement of the antitrust laws in this context might well be violative of public policy.

And, of course, the clause would not bind the people the cartel is really hurting: the citizens of the City of Seattle and of King County.

But Seattle always plays nice.  Well, most of the time.

— David Bruce

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2 Comments for this entry

David Alvarez
June 12th, 2013 on 1:30 pm

Interesting blog. Particularly the part about the “I am prohibited from suing if denied” clause in the agreement prospective owners sign. There would be no consideration to support that clause or that entire contract once someone is officially denied ownership of a club. All you would have is a failed contract, no mutual assent. That too could kill the clause mentioned on the NBA web site. Baseball is somehow exempt from anti-trust laws since 1922 but has removed player serfdom by allowing free agency after six years in the bigs so it less of an issue with MLB.

David Alvarez
June 12th, 2013 on 1:30 pm

Interesting blog. Particularly the part about the “I am prohibited from suing if denied” clause in the agreement prospective owners sign. There would be no consideration to support that clause or that entire contract once someone is officially denied ownership of a club. All you would have is a failed contract, no mutual assent. That too could kill the clause mentioned on the NBA web site. Baseball is somehow exempt from anti-trust laws since 1922 but has removed player serfdom by allowing free agency after six years in the bigs so it less of an issue with MLB.